Apple cuts iPhone supplier orders for a second time this month

The iPhone X (left) and XS. Apple is restarting production of the X and cutting orders for components of the XS for a second time. (Image source: own)

Apple has reportedly reduced orders from iPhone component suppliers again. According to DigiTimes, a "second wave" of order cuts is beginning to bring pain to some Taiwanese manufacturers. Apple is continuing to blame poor sales of the iPhone XS, XS Max, and XR for the order reductions.

Apple is staring down a potential crisis. Despite stellar reviews, the company’s latest iPhones are not selling as well as they had hoped, forcing the Cupertino King to cut orders from suppliers, reduce prices, and even restart production of last year’s iPhone X. Apple might be trudging deeper into the woods, though; the Taiwanese news outlet DigiTimes is reporting that Apple has initiated a “second wave of order reduction” from some of its biggest suppliers.

While many analysts correctly predicted an initial wave of order cuts, this second round is a bit unexpected and has left some Taiwanese companies in a lurch. Largan Precision, the supplier of iPhone camera lenses, is estimating a fall in revenue over November due to the reduction in orders from Apple. Other companies in Apple’s supply chain have had to lay off workers. Career Technology, who supplies flexible circuit boards to Apple, terminated 110 employees to counter the reduction in revenue due to Apple’s cut orders.

There is one company that’s largely unaffected by Apple’s actions. The Taiwan Semiconductor Manufacturing Company (TSMC), who manufacturers chips for the iPhone, is doing relatively well despite the reduced business from Apple. This is largely in part because of other smartphone OEMs, specifically Huawei. TSMC is one of the few chip manufacturers using a 7 nm process, which all major smartphone SoCs are embracing.

Apple’s A12 and A12X SoCs are built on a 7 nm process, but so are Huawei’s Kirin 980 (used in the Mate 20) and Qualcomm’s upcoming Snapdragon 8150, which will likely be used in almost all of 2019’s flagship Android handsets. AMD will also partner with TSMC for their Radeon Instinct M150 and M160 server acceleration chips and their upcoming EPYC server CPUs, all of which are built on a 7 nm process.

Because of these other partnerships (which likely have larger orders than Apple), TSMC has more than enough business. For other manufacturers and suppliers in Apple’s supply chain, however, the drop in iPhone sales is beginning to hurt.

It’s likely that smartphone burnout is settling in among consumers, particularly iPhone users. As the performance gap between processor generations continues to diminish and the price of flagship smartphones continues to rise, it is very probable that consumers are starting to see little to no benefit in upgrading.

I've been a "tech-head" my entire life. After graduating college with a degree in Mathematics, I worked in finance and banking a few years before taking a job as a Systems Analyst for my local school district. I started working with Notebookcheck in October of 2016 and have enjoyed writing news articles and notebook reviews. My areas of interest include the business side of technology, retro gaming, Linux, and innovative gadgets. When I'm not hunched over an electronic device or writing code for a new database, I'm either outside with my family, playing a decade-old video game, or sitting behind a drum set.